The pandemic of COVID-19 has an impact on both the economy of Malaysia and many other countries around the world. Industries such as travel, leisure & hospitality, tourism, airline, shopping and many more are seriously impacted by the pandemic.
Prime Minister Muhyiddin Yassin stated that during the MCO, an approximate RM2.4 billion was lost to Malaysia’s economy, a total of RM63 billion, as all business activities are suspended. The Gross Domestic Product (GDP) of Malaysia is estimated to contract by 4.5% in 2020 in line with the Malaysian Finance Minister and to rebound by 6.0% to 7.5% in 2021.
Then, Tengku Datuk Seri Zafrul Abdul Aziz, Finance Minister, mentioned that fast-moving sales of consumer goods have risen by 40 percent as a result of the pandemic. Due to the COVID-19 pandemic, Malaysian market behavior could have shifted as the current standard is more relaxed online shopping and contactless or cash payment purchases. One of the industries least affected by the COVID-19 pandemic is known as postal and courier services.
During the presentation of Budget 2021, the Minister of Finance said that the market climate has now improved. Then the government aims to accelerate investment, improve priority areas and promote enterprise access in the second target of business continuity. So, the first approach is to promote spending. To help local businesses, address potential obstacles, the Government will serve as a facilitator in ensuring access to investment capital, including enhancing the market climate.
However, for each challenge faced, there will emerge opportunities. In the sense of COVID-19, while companies are affected, there are still increasing industrial sectors, such as medical equipment, e-commerce and distribution, as well as education technology. In addition to the global trade situation, this scenario provides prospects for Malaysia to take advantage of attractive companies, investments and new economic opportunities.
As an incentive to support and boost the industry, the Government of Malaysia has allocated RM100 million to the maintenance of industrial area infrastructure during the budget presentation of the day. So, it makes the world arena more attractive for our small industries and helps the overall value chain.
It also a fit-for-purpose budget that meets the country’s immediate needs to foster recovery, development, and investment. Besides, RM42 million under the JENDELA (National Digital Access Plan) initiative to boost internet access in 25 industrial areas. Thus, it’s a good start as we seek to quickly restart the economic engine on all sides.
Other than that, the pandemic COVID-19 led the Malaysian Government to ensure that medicine, food and other important items were provided smoothly. This demonstrates short-term and long-term prospects for the manufacturing industry for the medical & health sector and the food & beverage sector.
The Malaysian government has proposed several lucrative tax breaks for the manufacturing industry. For example, principal hub incentive and relocation benefits for the industrial sector which is a 0% corporate tax rate for emerging businesses for 10 to 15 years, or a 100% investment tax exemption for existing companies for 5 years.
In short, the Malaysian Government has the opportunity to stabilize economic development in 2021. Consequently, any opportunity provided by the government as allocated RM100 million to the maintenance of industrial area infrastructure, RM42 million under the JENDELA (National Digital Access Plan) initiative to boost internet access in 25 industrial areas also provides the key hub for incentives and relocation benefits for the industrial sector. So, we hope that all the benefits will be able to boost our economies in 2021.
Kementerian Kewangan Malaysia. (2020). Belanjawan 2021. Retrieved from: https://www.treasury.gov.my/pdf/bajet/ucapan/ub21.pdf
Cheryl, P. (2020, November 16). Budget 2021: What industry leaders say about Budget 2021. The Edge Malaysia. Retrieved from: https://www.theedgemarkets.com/article/budget-2021-what-industry-leaders-say-about-budget-2021
Harizah, K. (2020, July 17). Malaysia needs to look at the new industry to boost the economy. The Malaysian Reserve. Retrieved from: https://themalaysianreserve.com/2020/07/17/malaysia-needs-to-look-at-new-industry-to-boost-economy/
Bernama. (2020, October 20). Malaysia’s creative industry needs support to boost its contribution to the economy — DOSM. The Edge Market. Retrieved from: https://www.theedgemarkets.com/article/malaysias-creative-industry-needs-support-boost-contribution-economy-%E2%80%94-dosm
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Nur Amiera Binti Zaidi is a 4th year student of Faculty Of Economics And Muamalat, USIM
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